USD/CAD climbs toward 1.4350 as the US Dollar strengthens, Oil prices weaken

USD/CAD appreciates as the DXY advances toward 106.50, driven by rising US yields.

Richmond Fed President Barkin emphasized the need for a cautious "wait and see" approach amid persistent policy uncertainties.

The commodity-linked CAD faces headwinds due to falling crude Oil prices.

USD/CAD continues its upward momentum for the fourth straight session, trading around 1.4330 during Asian hours on Wednesday. The US Dollar (USD) strengthens amid rising US Treasury yields. The US Dollar Index (DXY), which tracks the USD against six major currencies, climbs near 106.50, with 2-year and 10-year US Treasury yields rising to 4.13% and 4.33%, respectively, at the time of writing.

On Tuesday, Thomas Barkin, President of the Federal Reserve Bank of Richmond, forecasted another decline in Personal Consumption Expenditure (PCE) inflation later this week, noting the Fed’s significant progress in managing inflation. Despite his generally positive outlook, Barkin stressed the importance of a cautious "wait and see" approach due to ongoing policy uncertainties.

The Canadian Dollar (CAD) remains under pressure following US President Donald Trump’s confirmation that tariffs on Canadian and Mexican imports will proceed as planned, despite both nations' efforts to enhance border security and combat fentanyl trafficking ahead of the March 4 deadline. Trump further claimed that the US does not need Canadian crude Oil or lumber, contradicting a long history of trade between the two countries.

Additionally, falling crude Oil prices weaken the commodity-linked CAD, given Canada’s status as the largest Oil exporter to the United States (US). West Texas Intermediate (WTI) Oil price declines to around $69.00 per barrel at the time of writing. Crude Oil prices face downward pressure due to US economic concerns and broader market uncertainty impacting the energy demand outlook. President Trump’s foreign policies further contribute to this pressure, with potential peace talks between Russia and Ukraine raising expectations of lifted Russian sanctions and increased Russian Oil exports.